The spring forecasts of the European Commission and IMF confirm the expectations that the global economy is gradually recovering, though unevenly across regions and more slowly than after previous recessions. Both institutions revised their autumn forecasts upwards slightly, largely due to the recovery in developing economies, which has been more dynamic than projected in the autumn. The recovery of the European economy is positively influenced by the recovery of global trade flows, while domestic demand remains weak. In the first two months of 2010, the values of short-term indicators of economic activity remained roughly at the level achieved in autumn last year; positive movements were recorded only for activities related to the international environment, while domestic demand remains weak. In the first three months of 2010, revenue from taxes and social security contributions dropped by 2.6% relative to the same period last year. Slovenia's net budgetary position relative to the EU budget was positive in March due to higher receipts from the EU budget.
current economic trends Slovenian Economic Mirror, April 2010 7 Current Economic Trends International environment sustainability of public finance have increased since the autumn, particularly for certain developed countries. The spring forecasts of the European Commission and The latter is particularly important, according to the IMF, IMF confirm the expectations that the global economy is as governments will have limited room for manoeuvre gradually recovering, though unevenly across regions and should economic activity drop again as in the autumn more slowly than after previous recessions. Both institutions 2008. revised their autumn forecasts upwards slightly, largely due to the recovery in developing economies, which has The recovery of the European economy is positively been more dynamic than projected in the autumn. The influenced by the recovery of global trade flows, while rebound has also been positively impacted by rapidly domestic demand remains weak. According to the EC and recovering world trade flows, better-than-expected IMF forecasts, this year’s economic growth in the EU and conditions in financial markets (though still worse than euro area will thus be modest this year, at 1.0%. Along with before the crisis), and particularly by the movement of massive fiscal stimulus, the recovery in the EU will mainly inventories. After declining by 0.6% last year, the world reflect improvement in the international environment economy will increase by 4.2% this year and 4.3% next and consequently higher demand for European goods. year, according to IMF projections. Both institutions According to the EU, this will have a positive impact find risks to be more balanced than in the autumn, but particularly on countries with large shares of investment uncertainty regarding short-term prospects remains high, goods in total exports, which dropped most notably particularly because the recovery is still mainly dependent during the crisis and are now recovering at the fastest on fiscal and monetary stimulus. The sovereign debt risk pace, while euro area exports have also been favourably and the risk of a loss of the ability to ensure the long-term impacted by the depreciation of the euro in recent months. Domestic demand, however, remains weak, as private consumption stagnated in the last quarter of Figure 1: Structure of world economic growth last year and investment continued to decline. Overall, Rest of the world China USA Other developed countries GDP in the EU and euro area ceased to grow towards 5.5 the end of 2009, which the EC associates with the expiry of certain short-term incentives, while the short-term Contribution to Global GDP Growth, PPP Basis, three-year Forecast 4.5 movement of GDP was also significantly influenced by the cycle of inventory adjustment. GDP growth is also set to be modest in the first three quarters of this year, 3.5 and the recovery is not expected to become sustainable moving averages, % before the end of this year and in 2011. According to 2.5 the EC, the speed and sustainability of the economic recovery will crucially depend on the resolution of global imbalances. If Asian economies were to maintain the 1.5 current structure of economic growth and their current exchange rate policies, the burden of adjustment would 0.5 fall mainly on the European economy, which would lead to the appreciation of its real effective exchange rate and a consequent loss in competitiveness. The recovery -0.5 of the European financial system is another important 2000 2001 2002 2003 2004 2005
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